Classify Each Statement Appearing Below

question 121

Short Answer

Classify each statement appearing below.
a. No taxable transfer occurs
b. Gift tax applies
c. Estate tax applies
-Harry pays for the tuition for his niece to attend Drake University. The niece does not qualify as Harry's dependent.

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Definitions:

Previously-taxed Dollars

Funds that have already been subject to taxation, not requiring further tax upon withdrawal or transfer.

Qualified Pension Plan

A retirement plan that meets the requirements of the Internal Revenue Code and ERISA, offering tax advantages to the employer and employee.

Nontaxable

refers to income or financial transactions that are not subject to tax by the government.

Traditional IRAs

Retirement savings accounts that allow individuals to make pre-tax contributions, deferring taxes until the money is withdrawn.